7 Things You Wish You Knew Before Building New Construction
7 Things You Wish You Knew Before Building New Construction
Article From HouseLogic.com By: Melissa Dittmann Tracey Published: January 25, 2024
7 Things You Wish You Knew Before Building New Construction
Apply new-construction tips from a homeowner who has experienced the process three times — and knows the ropes.
Building a new home can be stressful. But my three-peat experience taught me some new-construction tips to ease my way to the finish line. Over 15 years, I’ve experienced the new-home process three times in three states — and I’d be tempted to do it again when I move next time.
Why Build New?
Why do I always build new? After all, building a house comes with tight deadlines, constant decisions, imagining blueprints in real-life, walk-through meetings, inspections, more decisions (Why is it so tough to pick the type of kitchen cabinet pull?), and blown budgets. If you prefer fewer surprises with more budgeting and timeline assurances, an existing home is a better bet.
Building a new home appealed to me because in a housing market in dire need of more homes for sale, new-home construction offers options. Along the way, I discovered other pros from building new — modern floor plans, usually less home maintenance upfront, and the chance to design your home to your style. Plus, there’s nothing like moving into a brand-new home you helped create.
Still, new-home buyers are quick to vent on the cons. They say they felt stressed, anxious, and frustrated during the construction process. They often cite conflicts over making decisions and overstretched budgets, according to Clever Real Estate’s 2022 survey of 1,000 new-home buyers.
If you’re considering building a new home,
Here are the 7 Things You Wish You Knew Before Building New Construction:
Use a Real Estate Agent
Make a real estate agent your first call. (Trust me, it’ll lessen your stress!) The first time I built, I walked into a model home and found the builder’s agent quick to answer my questions. But I realized the builder’s agent represented the builder — not me, the buyer — in the transaction. I wanted someone in my corner.
Find a buyer’s agent who specializes in new-home construction. They’ll coach you through the process, from blueprints and permits to the construction phase, help you find home builders to work with, and negotiate on your behalf. “Buying a home is supposed to be an exciting time,” says Jeffrey Gould, broker-owner of Jeffrey Gould Real Estate in Brandon, Fla. “I try my best to make it as fun and exciting as possible. There are a lot of different hands involved in building a home. At times, I find I need to act as a counselor or advocate for the buyer. Setting expectations early on in the process certainly helps in making the transaction smoother.”
Don’t Make Assumptions
You walk into a builder’s beautiful model home outfitted with top-notch finishes, from steam showers and heated floors to slabs of marble cascading kitchen walls. Don’t get duped. Learn what’s “standard” and what’s an “upgrade.” (My own mind-blowing lesson: My builder did not include as standard a door to the owner’s suite bathroom. I paid $500 extra just for a bathroom door!)
“All builders are different, and all builders have their own baseline to what comes standard with the home and what is an upgrade,” Gould says. “As I’m viewing homes with clients, I will keep asking the builder’s sales agent to explain what are upgrades in the home and what is standard.” It helps his buyers avoid surprises.
Secure Home Financing Up Front
Building a home is a lengthy process, often stretching seven to nine months. During that time, mortgage rates can change dramatically, possibly changing what you can afford. Sometimes it’s a good change: In my case, mortgage rates dropped from nearly 4% to the 2% range by the time I closed in 2020. Other times, it can be bad: From the fall of 2022 to 2023, the 30-year fixed rate mortgage climbed from averages of 5% to 7%, adding hundreds of dollars to monthly mortgage payments.
Look for a lender who specializes in new-home financing, such as with extended locks to protect you from mortgage rate variability (possibly 180 days or more, longer than traditional 30-day locks). Many builders tout their own financing or lender. They may even offer sales incentives for using preferred lenders, like buying down the mortgage rate or offering extended rate locks or discounted closing costs. Shop around and compare. Depending on your situation, you may also need to ask about construction financing or bridge loans if you’re buying a new house before selling your current house.
Know Your Complete Budget
The base price listed for the new-home isn’t likely what you’ll end up paying once you factor in selections and upgrades. For me, the final price surged about $100,000 above the base price listed. Yikes! Luckily, this wasn’t my first time building, so I knew to budget for the extra costs based on what others were paying. Gould asks builders to print out an estimate of the home with some of the structural items his buyers are considering. Most of the construction options and pricing for design selections aren’t fully configured until after you sign a purchase contract and are at a remote design center. So it’s important to budget ahead of time.
When selecting design options, ask what tier you’re choosing from. Whenever you deviate from the standard, your price will increase. Decide on what your priorities are, where to splurge, and where to save. I splurged on kitchen materials but saved with an unfinished basement. Also, don’t forget to budget for other items that aren’t included in the new-home construction: window treatments, landscaping, and most appliances. These add up, too!
Consider Home Resale Value
A big perk to new construction is that you can design a home to your style. But don’t go overboard. Home ownership can build long-term wealth when you make wise investments. Your agent can help you understand the home’s resale potential compared with similar homes in your area. Top-notch countertops, flooring, and lighting can add to new-home construction costs without adding to your home’s resale value.
In my case, I learned to focus on the floor plan more than the materials inside, which can easily be swapped later. For example, I found adding an extra bathroom offered better resale value than, say, heated bathroom floors or a fireplace in the primary suite. Builders usually offer the flexibility to modify floor plans, no matter if you’re building custom or using a builder’s existing floor plan. So, if you want an attic conversion to add a spare bedroom or a garage conversion to accommodate extra space for your workshop, you may find it more cost-effective to do it in the construction phrase. Plus, the change will add resale value.
Get a Home Inspection
No home is perfect — not even a new one. Don’t skip out on a home inspection. (Ask your agent for a referral.) Home inspectors will examine the plumbing and electrical components, heating and cooling system, roof, and more. Their report can be used as a punch-list for the builder to complete prior to closing. Usually, a builder completes everything, without any negotiation, a perk over buying a resale house where everything is up for renegotiation.
Consider going further with your inspections: I wish I had known about “phase inspections.” Adam Long, president of HomeTeam Inspection Service, which has 200-plus offices nationwide, says home inspectors can be brought in to check on the home during stages of construction, such as before the foundation is poured or drywall installed. They’ll see if items like pipes, electrical work, framing fasteners, and bolts are properly installed. “Once all the walls are in place, you cannot see what’s behind,” Long says. These extra prechecks can help spot any potential issues before the walls get sealed.
Know Your Home Warranty
A perk of building new is the warranties that come with the construction. Builders will differ in their offerings, but you’ll likely have builder and manufacturer’s warranties. Get a binder. These warranties cover potential defects in workmanship; different aspects of the home — like the electrical system, plumbing, or foundation — for a specified time. Manufacturer warranties will cover items including faucets, windows, and HVAC.
After the one-year mark, when the home has settled, many builders will return to make repairs (so all those nail pops in the walls and ceiling, which are common, will get fixed!). My two regrets: Not keeping a repair list throughout the year for that one-year mark and not bringing a home inspector back to do another check while the builder was still willing to make repairs at their cost.
There’s so much to consider with a new home build. As the to-do’s multiply, don’t overlook the excitement that builds in the process, from a home’s blueprint morphing into wooden frames going up, wall-by-wall, and your design selections coming together. Instead of poring over listings for the 100th time online and not finding anything, maybe it’s time to say, “I’ll just build it!” The third time was the charm for me.
If you are considering purchasing a new construction home, please give me a call to discuss the local opportunities in your area.
Andrew M. Meltzer
Broker Associate
Realty Mark Advantage, LLC
Two Greentree Center
9000 Lincoln Drive, Suite 120
Marlton, NJ 08053
Direct: 609-315-1511
Office: 856-457-4900;494
Broker License # 0678130
Branch License #: 1224118
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